23d Coneress, 


lst Session. [ a J 


IN SENATE OF THE UNITED STATES, 


Frsrvary 5, 1834. 


—<j-—_ 


Read, and ordered to be printed, and that 6,000 additional copies be furnished for the use 
of the Senate. 


——— 


Mr. Wessrer, from the Committee on Finance, (which consists of Messrs. 


Wesstrer, Tyter, Ewine, Maneum, and WILKINS, ) made the in 
lowing 


REPORT: 


The Committee on Finance, lo whom has been referred the report of the Se- 
cretary of the Treasury of the 3d of December, 1833, on the removal 
of the public deposites from the Bank of the United States, and a re- 
solution, submitted to the Senate by an honorahle member from Ken- 
tucky, declaring that the reasons assigned by the Secretary for the re- 
movul of the said deposiles are unsatisfactory and insufficient, have 
agreed on the following report: 


The act incorporating the Bank of the United States, as is justly remarked 
by the Secretary, is a contract, containing stipulations on the part of the © 
Government, and on the part of the corporation, entered into for full and 
adequate consideration. 

The Government became party to this contract by granting the charter, 
and the stockholders by accepting it. “In consideration,” says the charter, 
“cof the exclusive privileges and benefits conferred by this act on the said 
bank, the president and directors thereof shall pay to the United States, out 
of the corporate funds thereof, one million and five hundred thousand dol- 
lars, in three equal payments;” and, in another section, it declares that 
“ during the continuance of this act, and whenever required by the Secreta- 
_ ry of the Treasury, the said corporation shall give the necessary facilities 
for transferring the public funds from place to place within the United 
States or the Territories thereof, and for distributing the same in payment 
of the public creditors, without charging commissions, or claiming allow- 
ance on account of difference of exchange; and shall do and perform tne 
several and respective duties of the commissioners of loans for the several 
States, or any one or more of them, whenever required by law.’’ 

The section immediately following this provision, is in these wan lt; “ nd 
beit further enacted, That the deposites of the money of the Unite fates, in | 
places in which the said bank and branches thereof may be established, shall be 
- made in said bank or branches thereof, unless the Secretary of the Treasury 
shall at any time otherwise order and direct; in which case the Secretary 


£72] 2 


of the Treasury shall immediately lay before Congress, if in session, and if 
not, immediately after the commencement of the next session, the reasons 
for such order or direction. ”’ . 

It is not to be denied or doubted that this custody of the public deposites 
was one of the ‘benefits’? conferred on the bank by the charter, in consi- 
deration of the money paid, and the services undertaken to be performed, by 
he bank to the Government; and to this custody the bank has a just right, 
anless such causes have arisen as may have justified the Secretary in giving 
an order and direction for changing that custody. Any order or direction, 
therefore, issued under the provisions of this law, necessarily involves a 
eonsideration of the just extent of the Secretary’s power, and of the rights 
af the bank. : 

But Congress, in making this provision, unquestionably had in view the 
safety of the public funds, and certain important financial objects, as well as 
the making of a just consideration to the bank for the sum paid, and the 
services undertaken by it; and with this view, also, it has expressed its will, 
that the deposites shall continue to be made in the bank until good cause 
shall arise for ordering otherwise. Of this good cause, the Secretary of the 
Treasury, in the first instance, and Congress, ultimately and conclusively, is 

onstituted the judge. Every order, therefore, of the Secretary for chang- 
ng the deposites presents, for the examination of Congress, a question of 
general political propriety and expediency, as well as a question of right and 
ebligation to the bank. ! ; Bi sa 

These questions may be considered together.. They are intimately con- 
nected; because the right of the bank to retain the deposites, and to enjoy 

the advantages to be derived therefrom, cannot be denied, unless a case is 
shown to have arisen within the just power of removal vested in the Secre- 
tary, and which made it his duty to exercise that power. ‘The Secretary is 
only to remove the deposites for reasons. Of these reasons he is to give an 
account to Congress. If they be insufficient to justify the removal, the 
bank lias a right to a return of the deposites, and the country has a right, 
also, to expect that, in that case, the public treasure will be restored to its 
former place of safety. 

The Secretary having removed the deposites, and having reported his 
reasons to both Houses, the whole subject is now before Congress by way 
of appeal from his decision; and the question is, whether that decision ought 
tc stand, or ought to be reversed. 

The power of the Secretary, under the law, is evidently but provisional, 
It is a power which he may exercise in the first instance; but the propriety 

ef his conduct, in every instance of its exercise, is ultimately referred to 
the wisdom of Congress, and by Congress it must be judged. He is au- 
thorized to do the act, but Congress is to examine it'when done, and ‘to 
«oufirm or reverse it. The Secretary may change the deposites; but when 

“anged, Congress is to decide on the causes of such change, with authority 
either to sanction the removal, or to restore the deposites, according to its 
own judgment of right and expediency. : 

_ adn order to decide whether the act of the Secretary ought to be confirmed, 
it 1s requisite, in the first place, to form a just opinion of the true extent of 
his power under the law; and, in the second plave, to consider the validity 


of the reasons which he has speciall assigned for the exercise of that power 
in the present case. 


ue 


os [72] 


The opinion of the Secretary is, that his power over the deposites, so far 
as respects the rights of the bank, is not limited to any particular contin- 
Zencies, but is absolute and unconditional. If it be absolute and uncondi- 
tional so far as respects the rights of the bank, it must be absolute and un- 
conditional in all other respects; because it is obvious if there be any limi- 
tation, that limitation is imposed as much for the benefit of the bank as for 
the security of the country. ‘The bank has contracted for the keeping of 
the public moneys, and paid for it,as for a privilege or benefit. It hap 
agreed, at the same time, that the Secretary shall possess the power of re- 
meval; but, then, it isalso agreed, that whenever this power is exercised, 
the reasons therefor shall be reported to Congress; Congress being thus con- 
stituted the final judge aswell of the rights of the bank, in this particular, 
as of the good of the country. So that if the Secretary’s power be in truth 
absolute and unconditional, it restrains Congress from judging whether the 
public good is injured by the removal, just as much as it restrains it from 
_ Judging whether the rights of the bank are injured by the removal; because 
the limitation, if any, is equally for the security of the bank and of the 
public. : 

__ If the bank be interested in retaining the deposites, then it is interested 
in the truth or falsity, in the sufficiency or insufficiency, of the reasons given 
for their removal. Especially is it so interested, since these reasons are to 
be rendered to a tribunal which is to judge over the Secretary, and may 
form a different opinion on the validity of these reasons, and may reverse 
his decision. It clearly hasan interest in retaining the deposites, and there- 
fore is as clearly concerned in the reasons which the Secretary may-give for 
their removal. And as he is bound to give reasons, this very circumstance 
shows that his authority is not absolute and unconditional. Because, how can 
an appeal be given from the decision of an absolute power; and how can such 
a power be ca!led on to give reasons for any instance of its exercise? If it) | 
be absolute, its only reason is a reference to its own will. ie 

The committee think, therefore, that no absolute and unconditional power, 
was conferred on the Secretary; that no authority was given him by which 
he could deprive the bank of the custody of the public moneys, without rea~ — 
son; and that therefore his opinion is not to be admitted that, in no event, 
can any order for removing the deposites impair the, right secured to the 
bank by the charter. If removed without good cause, the committee think 
the removal does impair the rights of the bank 4) 

- But the opinion of the Secretary, as to his own powers, is hardly more 
limited in respect to the Government and the country, than in regard to the 
rights of the bani. eee” 

His opinion is, that it is his duty, and within his authority, in this view, 
also, to withdraw the deposites of the public money from the bank when- 
ever such a change would, in any degree, promote the public interest 
«“ The safety of the'deposites,”’ he says, ‘the ability of the bank to meet 
its engagements, its fidelity in the performance of its obligations, are only 
a part of the considerations by which his judgment must be guided. “he 
general interest and convenience of the people must regulate his conduct.” 

By the general interest and convenience of the people, the Secretary can 
only mean his own sense of that interest and convenience, be cause they 
are no otherwise to be ascertained than by his own judgment. 

The Secretary’s construction of the law, is, therefore, that he has power 
to remove the deposites whenever, for any reason, he thinks the public 


72] 4 


In this interpretation of the design and object of the law, and this broad 
construction of the Secretary’s power, the committee do not concur. 

Although the power of thé Secretary is not restricted by any express 
words or terms, nor by any particular occasions for’ its exercise specifi- 
cally and expressly designated or prescribed by the law, yet it is not to be 
admitted, as the committee think, that this pcwer is to be exercised capri- 
ciously, or in an arbitrary manner, or for loose or conjectural reasons, or on 
any idea of an unlimited discretion vested in the Secretary to judge on the 
general question of the public welfare; or, indeed, on any other grounds 
than those of necessity, or plain and manifest expediency, directly connect- 
ed with the subject over which the power exists. 

The keeping of the public money is not a matter which is left, or was 
intended to be left, at the will of the Secretary, or any other officer of the 
Government. This public money has a place fixed by law, and settled by 
contra:t; and this place is the Bank of the United States. In this place it 
is to remain. until some event occur requiring its removal. To remove it, 
therefore, from this place, without the occurrence of just cause, is to thwart 
the end and design of the law, defeat the will of Congress, and violate the 
contract into which the Government has solemnly entered. 

It is fit to be observed that no other law confers on the Secretary such a 
wide dizeretion over the public interests in regard to any subject, or gives 
him a power toacton the rightsof others, or on the rights of the public, in any 
part of his official duties, with so unlimited an authority as is here asserted. 
Everywhere else, he appears in the character of a limited and _ restricted 
agent. He is the financial officer of the Government; he is the head of the 
Department of the Treasury. THis duty is, to report annually to Congress 
the state of the. finances, and to communicate to either House, when request- 
ed, any information respecting the Treasury; and he is to superintend the 
collection of the revenue. But he has no authority over the circulating 


‘medium. of the country, either metallic or paper; nor has he the control of 


the national currency. It is no part of his duty either to contract or expand 
the circulation of bank paper, nor in any other way to exercise a general 
superintendence over the money system of the country. These general 
Interests of the Government and the people are not confided to his hands 
by any of the laws which created his office, and have prescribed his duties; 
and the committee are of opinion that the charter of the bank no more in- 
tended to give such a wide scope to the Secretary in regard to the deposites, 
than other laws intended to give him the same wide scope in respect to 
other duties of his office. No intimation-of such intention is found either 
in the charter itself, or in any of the legislative debates which took place in 
both Houses when the bank was established; or in the discussions which 
have been had on the various occasions which have been more recently pre- 
sented for calling forth the sentiment of Congress. In none of these sources 
is there to be found any proof that the Legislature has delegated, or intend- 
ed to delegate, this extraordinary power of judging of the general interest 
of the people to the Sceretary of the Treasury Such a power, did he 
possess It, would necessariiy make him the general superintendent of all. 
the proceedings of the bank; because it would enable him to compel the 
bank to conform all its operations to his pleasure, under penalty of suffering 


a removal of the public moneys. This would be little less than placing all 
the sul “4 


law its m : Loe nN alenan le 
anager, nor bs of its managers; nor has he any right, in any form, aes 


psiantial power of managing the bank in his hands. Bathe is not bye r 


5 [72] 


to interfere in its management. On the contrary, the very language of the 
charter rejects all idea of such general supervision over its concerns by him, 
or any other officer of Government. That language is, that ‘* for the man- 
agement of the affuirs of the corporation there shall be twenty-five di- 
rectors annually chosen;” and, under the restrictions contained in the char- 
ter, these directors are entrusted with the whole general business of the 
bank, subject, of course, to all the provisions of the charter and the by- 
laws; subject, too, always to the inspection and examination of either House 
of Congress; subject always to regular inquiry and trial, and bound always 
to communicate to the head of the Treasury Department, on request, state- 
ments of its amount of stock, debts due, moneys deposited, notes in circu- 
lation, and specie on hand. 

Under these restrictions, the establishment of its offices, and the appoint- 
ment of its officers; the amount of its discounts, and every thing respecting 
those discounts; its purchases and sales of exchange, and ell other concerns 
of the institution, are to be conducted and managed by the iirectors. There 
is nothing in the charter giving the siightest authority to the Secretary to 
decide, as between the bank on tine one hand, and the Government or the 
people on the other, whether the general management of the directors is 
wise or unwise, or whether, in regard to matters not connected with the de- 
posites, it has or has not violated the conditions of its charter. The. state- 
ment which the bank ig bound to make to the Secretary, he may lay before 
Congress; and he is doubtless, bound by his official duty, to communicate to 
Congress any other information in his possession, tending, in his judgment, 
to show that the bank had disregarded its charter, or failed to fulfil all or 
any of its duties. But here his authority, so far as it regards the general 
course and operations of the bank, ends. It is then for Congress to ect, if 
it see occasion, and to adopt the regular remedies for any evils which it 
may suppose to exist. But it transcends the power of Congress itself to 
pronounce the charter violated, without hearing, without trial, without 
judgment; far less is any such power of pronouncing final judgment confided 
to the Secretary. ‘His power simply is, that in regard to the deposites of . 
ihe public money, he is to judge, in the first instance, whether just cause 
has arisen for their removal. . “a 

The Secretary seems to suppose, indecd the very basis of his argumen 
assumes, that the law has confided to him a general guardianship over the 
public welfare, so far as that welfare is in any way connected with the bank, 
or liable to be affected by its proceedings; and that he holds the power of 

) removing the deposites as the means, or instrument, by which he is to en- _ 
: force his qwn opinions respecting that welfare. ‘The committce do not 
adopt this opinion. They think that if such had been the design of the law, 
its provisions would have been very different from those which it does ac- 
tually contain. ae 

If such general guardianship had been intended to be conferred on the Se-~ 
cretary, it is reasonable to believe that he would have been vested with pow- 
ers more suitable to such a high trust. If he had been made, or intended to 
be made, general inspector, or superintendent, other authority than merely 
that of removing the deposites would have been given him, for this plain 
reasons, that the Government and the country have interests of much mag- 
nitude connected with the bank, besides the deposites of the public moneys 
in its vaults, and to which interests, if endangered, the removal of the de- 
posites would bring no security. 


a7 


[72] 6 


The Government is proprietor of seven millions of the stock of the bank; 
and yet no authority is given to the Secretary to sell this stock under any 
circumstances whatever, or in any other way to interfere with it. 

The bills and notes of the bank, too, are made receivable in all payments 
to the United States, until Congress shall otherwise order; and no power is 
given to the Secretary to prevent their being so received, either during the 
session of Congress or in its recess, however the credit of these bills and 
notes might become depreciated. Pr 

How is it possible to conceive that, if Congress intended to give to the 
Secretary a general right to judge of the operations and proceedings of the 
bank, and a power, of course, to declare when it had violated its duty, and 
was no longer trustworthy, it should yet leave him under an absolute obli- 
gation to receive its bills and notes in all payments to the Treasury, though 
they might have Jost all credit; and place no means in his hands to‘execute 
his high authority of superintendent, except the mere power of removal? 

Wherever it is clear that Congress has given the Secretary a power, it has 
given him the means of informing his judgment as to the propriety of exer- 
eising that power. He has power to remove the deposites; and ample means 
are afforded him by which he may learn, from time to time, whether those 
deposites are safe. For this purpose, it is expressly made the duty of the 
bank to furnish him, so often as he shall require, if not oftener than once a 
week, with statements of the amount of the capital stock of the corporation, 
of the debts due to it, of the moneys deposited in it, of its notes in circula- 
tion, and specie-on hand; and he has a right to inspect the general accounts, 
in the books of the bank, relating to this statement. ‘This statement enables 
him to judge of the solvency and stability of the bank, and of the safety of 


a 


_ the public money deposited in it. Here, then, is a power, and all appropriate 


means given for the just and enlightened exercise of that power. Confined 
to the deposites, the power is accompanied with all rational auxiliaries and 
attendants. 

But for the depreciation of the bills of the bank, should that happen, and 
for other cases of maladministration, Congress has provided just and appro- 
priate remedies, to be applied by itself or others, in exclusion of the Secre- 
tary. . For redress of these evils, no power is given to him. 

For the security of the public interest, the law reserves a right to either 
House of Congress to inquire, at all times, into the proceedings of the 
bank, and if, on such inquiry, it appears in any respect to have violated its 
charter, Congress may bring it to trial and judgment. Power is given to 
the President, also, to institute judicial. proceedings, if he shall have reason 
to believe that any such violation: has taken place. But no sueh power is 
given to the Secretary. 

The proposition, then, eannot be maintained, that Congress has relied, 
for the security of the public interests, and the preservation of the general 
welfare, so far as it is connected with the bank, on a genera! discretion 
reposed in the Secretary: for two reasons, first, because it has not given 
him the appropriate powers of remedy in the most important instances; and, 
secondly, because it has,in those instances, either expressly reserved those 
powers to itself, or expressly conferred them-on the President. 

If the Secretary cannot prevent the notes of the bank from being received 
at the custom houses and the land offices, even after they should be discre- 
dited 3 if he have no power to touch, in any way, the seven millions of stock 

belonging to the Government; if the power of examination into the pro- 


7 | 72] 


eeedings of the bank be given, not to him, but to either House of Congress; 
if he have no power, but Congress and the Pr-sident, each, has power to 
direct a legal investigation into the conduct of the bank; how can it possibly 
be maintained that a general inspection and guardianship over the public 
welfare, so far as it is connected with the bank, is confided to him; and that 
his authority to remove the deposites was given, not to protect the depo- 
sites themselves, and secure their proper use, but to enable him to enforce 
upon the bank, under penalty of their removal, such a course of manage- 
ment as his sense of the public interest, and of the convenience of the people, 
may require? Such a construction would give the law a strange and an un- 
deserved character. It would convert the power of removal, intended 
for remedy and redress, into. a mere instrument of punishment; and it 
would authorize the infliction of that punishment without hearing or trial, 
in the very cases in which the law yet says that, if violation of duty be 
charged, the charge shall be heard and tried before judgment is pronounced; 
and the duty of preferring this charge, and of prosecuting it to judgment, is 
given, not to the Secretary, but to Congress and to the President. 

The contingent power given to the Secretary to remove the deposites 
evidently shows that Congress contemplated the possibility of the happening 
of some sudden evil for which either no other remedy was provided, or 
none which could be applied with sufficient promptitude; and for which evil 
removal would be a just and appropriate remedy. The remedy prescribed, 
then, tedches us the nature of the evils which were apprehended. We can 
readily understand that threatened danger to the funds was one, and proba- 
bly the chief of those evils; because ‘change into other hands is the ready 
and appropriate measure which would rationally suggest itself to all minds 
as the proper security against such danger; and change is the remedy actual 
ly prescribed. Neglect to transfer the deposites from one place to another, 
as the exigencies of (rovernment might require, and thereby to furnish those 
facilities of exchange which the charter demands of the bank without com- 
mission and without charge, is another evil for which, should it happen, the 
rémedy would naturally be the withdrawing of the funds, and the placing 
of them in their former custody, so that they could be transferred or ex- 
changed by the Treasury itself. 

But who can see any connexion or relation, such as ordinarily exists be- _ 
tween an evil apprehended and a remedy proposed—between such an evil 
as a supposed over-discount, for instance, by the bank at one time, or an 
under-discount at another, and the abrupt removal of all the public deposites? 
And if no one can see the connexion, how can it be supposed that, in giving 
the power of removal as a remedy, Congress had ‘in view any such evil? 

A question may arise between the Government and the bank respectin 
the right of the parties to the sum of one hundred and fifty thousand dol- 
lars, as in the case of the French bill. ' 

It is a question on which different opinions may be entertained, and 
which is, in its nature, fit for judicial decision. Does any man imagine that 
such a case as this was in the eye of Congress when they granted the power 
of withdrawing the whole public treasure from the bank? Can it be for 
one moment maintained, that Congress intended that, in such a case, the 
Secretary should compel the bank to adopt his own opinion, by the exercise 
of a power, the very exertion of which deranges the currency, interferes 
with the industry of the people, and, under some circumstances, would 
hazard the safety of the whole revenue? 


[ 72] : 


The committee think it cannot admit of rational doubt, that if Congress 
had intended to give to the Secretary any power whatever, not directly 
touching the deposites themselves, not only would it have specially pointed 
out ‘the eases, but it would also, most assuredly, have provided a remedy 
more suitable for each case. «The nature of the remedy, therefore, which 
is prescribed, clearly shows the evils intended to be provided against. 

To admit that the Secretary’s conduct is subject to no control but his own 
sense of the general interest and convenience of the people, is to acknow- 
ledge the existence, in his hands, of a discretion so broad and unlimited, 
that its consequences can be no less than to subject, not only all the opera- 
tions of the bank and its offices, but its powers and capacties, perhaps its 
very existence, to his individual will. He is of opinion that the law creat- 
ing it is, in many of its provisions, unconstitutional; he maynot unnaturally, 
therefore, esteem it to be his duty to res'rain and obstruct, to the utmost of 
his power, the operation of those provisions thus deemed by him to be un- 
coustitutional. He is of opinion that the existence of such a powerful 
moneyed monopoly is dangerous to the liberties of the people. It would 
result from this that if, in the discharge of his official duty, he is to follow 
no guide but his own sense of the interest of the people, he might feel bound 
to counteract the operations of this dangerous monopoly, diminish its circu- 
lation, curtail its means, and prejudice its credit. To accomplish these very 
purposes, and these alone, he might withdraw the deposites. The power 
given him by Congress would thus be used to defeat the will of Congress in 
one of its most important acts, by discrediting, and otherwise injuriously 


affecting an institution which Congress has seen fit to establish, and which : 


it has declared shall continue, with all its powers, to the expiration of its 
charter. ! 

The power conferred on the Secretary is a trust power, and, like other trust 
powers, in the absence of express terms setting forth the occasions for its 
exercise, it is to be construed according to the subject and object of the trust. 
As in other cases of the deposite of moneys in banks, the primary object 
sought to be accomplished by Congress, by that provision of the charter now 
under consideration, is the safe keeping of the money. ‘The Secretary’s 


trust, therefore, primarily and principally, respects this safe keeping. But 


another object is distinetly disclosed in the charter, which object is intimate- 
ly connected with the fund, and that is, its transfer and exchange from place 
40 place, as the convenience of Government might require. The Secretary’s 
rust, therefore, respects also this other object thus connected with the fund; 
tand when either of these objects requires a removal, a removal becomes a 
Just exercise of his authority. ‘l'o this extent, none can doubt the existence 
of his power. If, in truth, the money is believed to be unsafe; if, in truth, 
the bank will not grant the facilities which it has promised, in consideration 
of receiving and holding the fund, then, certainly, it ought to be removed. 
But here the power must stop, or else it is altogether unbounded. Here is 
a just and reasonable Jimit, consistent with the character of the power, con- 
sistent with the general duties of the Secretary, and consistent with the na- 
ture of the remedy provided. 

The charter of the bank is the law: 
ture. That will is, that the bank shall exist, 
of ils term. That will, too,. 
posites shall continue in the 

the bank fulfils all its duty 


with all its powers, to the end 
as the committee think, is, that the public de- 
bank so long as they are safe, and so long as 
in regard to them. ‘The Secvetary assumes a 


it is the expressed will of the legisla-— 


«Sate 


: [72] 


broader ground. He claims a right to judge of the proceedings of the bank 
on all subjects. Admitting the fund to be safe, and admitting that the bank 
has performed all its duties in regard to it, he claims an authority, neverthe- 
less, to remove the deposites whenever he shall form an opinion, founded on 
the conduct of the bank in any particular whatever, and however uncon- 
nected with the public moneys, that the general interest of the people re- 
quires such removal. If, in his opinion, it discounts too little, or discounts 
too much; if it expands or contracts its circulation too fast or too slow; if its 
committees are not properly organized; if it claim damages on protested bills, 
which it ought not to claim; if, in his opinion still, it is guilty of a wrongful 
meddling in polities, or if it do any thing else not consistent with his sense 
of the public interest, he has a right to visit it with a withdrawal of the pub- 
lic money from its custody. 

If this claim of power be admitted, it would seem to the committee to be 
a fair result, that the Secretary has power to withdraw the deposites for 
no other reason than that he differs with Congress upon its constitutional au- 
thority to create any bank, or upon the constitutionality of this particular 
bank, or upon the ..utility of continuing it in the exercise of its chartered 
powers and privileges, till its term shall expire. 

The committee, therefore, are of opinion that it was not the intention of 
the Legislature to give to the Secretary of the Treasury a general guardian- 
ship over the public interests in all matters connected with the bank; but 
that his power is a limited one, and is confined to the safety, and the proper 
management of that portion of the public interest to which it expressly re- 
lates; that is to say, to the public moneys in deposite in the bank. 

But the extent of the Secretary’s discretion, as asserted by himself, reaches 
even farther than the wide range which the committee has here described. 
It is not confined to the protection of all the various interests which the Go- 
vernment and the country have in the bank, or to a supervision and control 
over all the conduct of the bank, but it embraces all branches of the public 
interest, and touches every thing which in any way respects the good of the 
people. He supposes himself rightfully to possess the power of removing 
the deposites, whenever -any causes, springing up in any part of the whole 
wide field of the general interest, may appear to him to call for such re- 
moval. Notwithstanding he may suppose all the great interests confided to 
the bank to be perfectly safe; notwithstanding he may have no occasion to 
eomplain of any part of its conduct; notwithstanding, even, it may so have 
demeaned itself as to have become the object of his favor and regard; yet, if 
his construction be admitted, he may remove the deposites simply because 
he may be of opinion that he might place them, with a prospect of still greater 
advantage, in other hands. If he be of opinion that the commerce of the 
country, or its manufactures, would be benefitted by withdrawing the public 
money from one bank and placing it in many, that would be an exercise of 
authority entirely within the limits which he prescribes to himself. It 
would be a case in which he would only follow his own sense of what the 
general interest and convenience of the people required. He might think, 
too, that by withdrawing all the public treasure from the Bank of the United 
States, and placing it in the hands of twenty or thirty State banks, to remain 
there during his pleasure, and to be drawn thence, again, at his will, he might 
be enabled effectually to advance certain other objects which, whatever 
others might think of them, he might consider to be essential to the good of 
the people. All this, if he be right, is within his just authority. A power ; 

J oO 


[72 | 10 


necessarily running to this extent, is a power, in the opinion of the commit- 
tee, which can never be admitted. 

Haviag thus expressed an opinion upon the general extent of the power 
claimed by the Secretary, the committee proceed to consider the reasons 
which he has reported to Congress as the particular grounds on which the 
power has been exercised in the present case. 

The first reason assigned by the Secretary, is the near approach of the 
period when the bank charter will expire. -That period is the 4th of March, 
1836, more than two years distant; nearly two years and a half at the time 
of the removal. ‘Three sessions of Congress are, in the mean time, to be 
holden, and inasmuch as the Secretary himself says that “the power over 
the place of the deposites for the public money would seem properly to be- 
tong to the legislative department of Government,” the committee think 
it might reasonably have been expected by him that Congress would not 
fail to make, in season, suitable regulations on a subject thus admitted to 
be within the just exercise of its authority, and properly one of its duties. 

Why, then, should he not have waited till Congress had seen fit to act upon 
the subject, or had manifested a disposition not to act? The matter of the 
deposites had been before Congress last session, and Congress had then 
thought no provision to be, as yet, necessary. Its undoubted sense was, 
that the public moneys should remain where they were. This was manifest- 
ed by proofs too clear to be questioned. Another session was fast ap- 
proaching; and why was not the whole subject left where Congress had 
chosen to leave it at the end of its last session, to await the free exercise of 
its legislative power at this session? It might have been fit for the Execu- 
tive to call the attention of Congress, at this time, to the necessity of some 
legal provisions respecting the future custody of the public moneys; and it 
would, doubtless, have been proper for Congress, without such call, to take 
up and consider the subject at its own suggestion; but the committee see no 
reason whatever, in the approaching expiration of the charter, for a change 
so sudden, and producing such important effects, made so long before that 
expiration, at a time when Congress had recently had the subject before it, 


and when, too, it was again about to assemble, and would naturally have . 


reasonable and full opportunity to adopt any necessary legislative provi- 
sions. 

The Secretary has stated no reason satisfactory to the committee for not 
deferring this important step until the meeting of Congress. He sets 
forth no emergency, no sudden occasion, nothing which, in their judgment, 
made immediate action by him necessary. 

The Secretary supposes it to have been his duty to act on the belief that 
the bank charter would not be renewed; and he refers to recent popular elec- 
tions in support of this opinion. The conimittee believe it altogether unu- 
sual for reasons of that kind to be assigned for public and official acts. On 
such subjects, opinions may be very various. Different and opposite con- 
clusions may be drawn from the same facts by different persons. One man 


may think that a candidate has been elected on account of his opposition to 


the bank; another may see, only, that he has been chosen, notwithstanding 
such opposition. One may regard the opposition, or the support, of any mea- 
sure, by a particular candidate, as having been, itself, a promoting cause of 
the success of his election; another may esteem it as a formidable objection, 
overcome, however, by more powerful! reasons; and others, again, may be 
of opinion that it produced little or no effect on the one side or the other. 


11 [ 72] 


But if inferences, less uncertain, could be drawn from such occurrences, the 
committee still think, that for a public officer to presume what law the Le- 
gislature will or will not pass, respecting matters of finance, from the elec- 
tion of a particular person to be Chief Magistrate, implies a consequence from 
such election which the constitutional independence and dignity of the Le- 
gislature do not allow to be admitted. 

But if for this, or other reasons, the Secretary had persuaded himself that 
the charter of the bank would not be renewed, still, it certainly did not fol- 
low that the deposites ought to be removed before Congress had decided on 
the hands into which they should be transferred, and had made suitable re- 
gulation respecting their future custody. If there were good ground for 
thinking that Congress would not recharter the bank, for that very reason 
there was equally good ground for supposing that it would make proper and 
seasonable provision for the keeping of the public moneys elsewhere. How 
could the Secretary doubt that Congress would omit to do that which he 
avers to be one of its appropriate duties? The question is, not what mea- 
sures Congress might be expected to adopt—whether the rechartering of the 
bank, or what other measures; but whether it ought not to have been pre- 
gumed that it would adopt some measure, and that a seasonable and proper 
ome, according to its power and its duties; and whether, therefore, this an- 
ticipation of the action of Congress, on the eve of its session, is to be jus. 
tified. 

The bank charter declares that the deposites of the public money shall be 
made in the bank and its offices and that the bank shall continue till March, 
1836. Where does the Secretary find his power to decide that the deposites 
shall be so made but for seventeen years from the date of the charter, instead 
of twenty? If he may thus withdraw the deposites two or three years be- 
fore the expiration of the charter, what should restrain him from exercising 
the same authority five years before its expiration, or ten years? A plain and 
cogent necessity, the existence of a case which admits of no reasonable doubt, 
and which is too urgent for delay till Congress can provide for it, can alone 
justify an interference with the public moneys, lodged in the bank by law 
for the double purpose of safe keeping, and fulfilment of solemn contract. 

But supposing it not reasonable for the Secretary to have expected the in- 
terposition of Congress, and admitting that he might consider the withdraw- 
ing of the deposites as an act which was to be done, at some time, by him- 
self, how can it, nevertheless, be argued, that so early and so sudden a with- 
drawal was necessary? The committee can perceive no possible reason for 
this, in any state of facts made known to them. 

The withdrawal of the money, left on deposite, from a bank whose char- 
’ ter is about to expire, is naturally one of the things longest postponed. It 

is as safe the last day of the existence of the bank, in common cases, as at 

any previous period. The bank expects the recal of its deposites, near the 
period of its expiration, and prepares itself accordingly. The operation, if 
made gradually, produces, when thus conducted, the least possible disturb- 
ance in the business of the community. Former experience would seem to 
have held out a salutary light for the guidance of the Secretary in this 
part of his official duty. 
At the time of the expiration of the charter of the former bank, Mr. 
- Gallatin was Secretary of the Treasury, and the public deposites were in 
the bank. The charter of the bank was to end on the 4th of March, 1811, 
. and it does not appear that Mr. Gallatin thought it necessary to make any 


[ 72] 12 


ng on them for the common uses of Government, until late in the very 
month preceding the expiration of the charter. A large amount of ines 
deposites remained, indeed, in the vaults of the bank after the charter ha 
expired, and until they were wanted, in the general operations of the Trea 
sury. And why should it, be otherwise? Why should that be done sud- - 
denly now, which the Secretary thinks could not be done suddenly here- 
after without great inconvenience? Is it not the just inference, from ms 
ewn argument, that the thing should not have been done suddenly at. all? 
As to the idea that the credit of the paper of the bank will be depreciated 
near the time of the expiration of its charter, or that it would be inconve- 
nient for it, at that time, to be called on for the deposites, the committee 
are ulterly at loss to see the slightest foundation for such an opinion. Ex- 
perience is against it; and all reason, as the committee think, is against ip 
also. There is nothing to render it in any degree doubtful that the bills o 
the bank will be in as good credit the last day of its charter, and even after 
that time, if any shall be outstanding, as they are now; and there is as litile 
to render it doubtful that then, as now, the bank would be competent to 
answer ail demands upon it. In the opinion of the committee, the with- 
drawal of the fund was both unnecessarily early, and unnecessarily sudden. 


It might have been made gradual; it might have been deferred; and it might’ 


have been, and ought to have been, as, the committee think, not ventured 
upon at all, until the attention of Congress itself had been called to the sub-. 


ject. The committee therefore entirely dissent from this first reason, re- 


ported by the Secretary. They see nothing which proves to them the 
existence of the slightest occasion for taking this important step, at the 
moment it was.taken. So far as it depends on this reason, the committee 
think the removal was made without necessity, without caution or prepara- 
tion, with a suddenness naturally producing mischievous consequences, and 
tn unjustifiable anticipation of the legislation of Congress. 

But the Secretary thinks there are other reasons for the removal, grow- 
ing out of the manner in which the affairs of the bank have been managed, 
and its money applied, which would have made it his duty to withdraw the 
deposites at any period of the charter. 

Of these reasons, thus arising from the alleged misconduct of the bank, 
the first is, that many important money transactions of the bank are placed 
under the control of a Committee of Exchange, of which committee, no one 
of the public directors, as they are called, is allowed to be a member, instead 
ot being transacted by a board of seven directors. 

This charge consists of two parts; first, that the discounts of bills are made 
by a committee, and not by a quorum of the board; second, that the pub- 
hie directors are not allowed to be of this committee. 

First. It is notalleged that, in the discounts of bills by this committee, 
any indiscretion has been committed, or any loss incurred; or that, in conse- 
quence thereof, any facility to the mercantile community has been withheld, 
or any duty of the bank to the Government violated. The objection is, sim- 
ply, that bills are discounted by a committee. Supposing this to be an irre- 
gularity, or illegality, in the proceedings of the board, how is it to be cor- 
rected by withdrawing the deposites? What connexion is there between 
the two things? It is not pretended that this mode of discounting bills en- 
dangered the deposites; it is not pretended that it made the bank either less 


able, or less willing, to perform every one of its duties to Government. 
How should the w 


aye SOW Sponld the. ithdrawal of the deposites then be suggested by the dis- 


* (1s ae 


é vw J 

able to perceive the least propriety in applying the power of removal to a 
proceeding of this kind, even if it were admitted to be irregular or illegal. 
But is the practice illegal? It is believed to be not at all unusual. It is be- 
lieved to be quite common, in banks of large business, for bills of exchange, 
which are presented every day, and almost every hour in the day, to be dis- 
counted either by a committee of the directors, or by the president, or even 
other officers, acting under such general orders and instructions as the direc- 
tors, at their stated meetings, prescribe. A large board of directors cannot 
assemble every day, perhaps not oftener than twice a week. If bills of ex- 
change could only be discounted at these periodical meetings, the business 
_ of exchange could not go on with the promptitude and despatch so impor- 
tant to commercial men in such transactions. 

The committee suppose the truth of these remarks will be at once admit- 
ted by all who have knowledge of business of this kind. ap gn’ 

The general management and control, the authority of examining and su- 
pervising, of contracting or enlarging the amount of daily discounts, accord- 
ing to the state of the bank, and of giving every other order and direction 
on the subject, still remains with the directors, and is constantly exercised 
by them. They still manage the affairs of the bank, in the language of the 
eharter, although they may depute to a committee the authority of inquiring 
and deciding upon the credit of persons whose names are on bills of ex- 
change offered for discount, and on the rate of exchange, current at the day. 
The legal question would be, whether the directors, by rule or by law, may 
not authorize a small number of their own board to discount bills. The 
bank has been advised that it might rightfully do this; and if it be not clear 
that this opinion is right, it is certainly far from clear that it is wrong; and 
in this state of the question, the.general practice of other banks, under sim- 
ilar provisions in their charters, may well relieve the directors from the im- 
putation of intentional mismanagement. 

If, in all this, the bank has violated its charter, what other banks of ex- 
tensive business have not done the same thing? 


But the other subject of complaint, and that which seems to be regarded | 


as the more offensive part of this regulation, is, that the public directors, as 
they are called, were not allowed to be on this committee. 

It may be observed, in the first place, that if the discounting of bills of 
exchange by a committee, instead of the whole board of directors, be ille- 
gal, it would hardly be rendered legal by placing any or all of thése public 
directors on the committee as members. But the Secretary seems to sup- 
pose that there was some particular object in this exclusion of these diree- 
tors, as if there had been something wrong to be done, and therefore se- 
crets to be kept by this committee. It is not easy to see what foundation 
there can be for this opinion. All those discounts are matter of record: 
They appear every day in the books of the bank. Every director, on or 
off the committee, sees them, or may see them, at pleasure. There is no 
secrecy, nor any motive for secrecy, so far as this committee can perceive. 
Very proper causes may have existed, for aught that can be known by the 
Senate for the omission of these particular directors from this particular 
' committee. Their services might have been deemed more useful in other 

committees; or however respectable in general character, or however useful 
in other parts of the direction, they may have been esteemed not so well 
acquainted as others‘with the business of foreign or domestic exchange. 
And even if there were, or are, other causes for the omission, such as tend 


i 


[ 72] 14 yd 


less to prove the existence of that harmony and mutual respect which it {is 
so desirable should prevail in such a board, these causes cannot furnish any 
just ground for asserting, either that the business of exchange was illegally 
conducted, or that the constitution of the committee was proof of the exis- 
tence of any motive not fit to be avowed. 

But the Secretary entertains an opinion respecting the character and duties 
of the directors appointed by the President and Senate, in which the com- _ 
mittee do not concur. . He denominates them ‘¢ public directors,” ‘ offi- _ 
cers of the Government,”’ &c. 

By the charter of the bank there are to be twenty-five directors. Of 
these, twenty are to be chosen by the individual stockholders, and five ap- 
pointed by the President, with the advice and consent of the Senate. As 
the Government owned one fifth of the stock of the bank, it was judged 
expedient to place in the hands of the President and Senate the appoint- 
ment of one-fifth of all the directors. But they are not called public direc- 
tors, nor officers of the Government, nor public agents; nor are they 
entitled, so far as the committee can perceive, to either of these appella- 
tions, any more than the other directors. The whole twenty-five directors 
are joint managers of a joint fund, each possessing precisely the same 
powers, and charged with the same duties as every other. They derive 
their ippointments, it is true, from different origins, but, when appointed, 
their authority is the same. There is not one word in the charter intimat- 
ing, in the remotest manner, that the five directors appointed by the Presi- 
dent and Senate have any particular duty, or are the objects of any peculiar 
trust, The charter calls them not Government directors, not public direc- 
tors, but simply the directors appointed by the President aad Senate. They 
are placed ia the direction to* consult with the other directors for the com- 
mon good of the bank, and to act with these others, and vote with them on 
all questions. They are, what the law calls‘them, directors of the bank, 
not agents of the Government. They are joint trustees with others in @ 
joint interest. If any thing illegal or improper takes place in the board, 
they are bound to resist it by the duty which they owe the individual stock- 
holders, as much as by the duty they owe the Government; because they 
are agents of the individual stockholders, and have the same authority to — 
bind them by their acts as to bind the Government; and, in like manner, 
it is the duty of those directors who are appointed by the individual stock- 
holders to give notice, as well to Government as to the stockholders, if any 
thing illegal take place, or be threatened. ‘All those directors act and vote 
together on the smallest as well as on the highest occasions; and, by their 
joint votes, bind the corporation, and bind both the Government and indi- 
we stockholders to the extent of their respective interests.in the corpo- 
ration. 

If the directors appointed by the President and Senate had een excluded 
a diane from any part of the power exercised by the others; if it had 
be i. 4 ty en them to interfere, to the same extent, and with the same 

» as the rest in the common business of the bank, there might be some 
reason for supposing that an uncommon character—a character not so much 
Hectigy ibarrmleie and inspection, was intended to be conferred on 
They ea ie 0 hi ae and justly, in all transactions ‘of the bank. 
sk. dat) a et ona aki Hees the other directors. Being, then, 

| pieces Siang pas character of directors, and enjoying all its powers — 
’ committee know no form of argument by which an 


sore Reet 
uncommon and extraordinary character is to be raised by construction, and 
superadded to the common character of directors which thus already belongs 
to them. 

By granting the charters and by accepting it, the Government on the one 
hand, and the individual stockholders on the other, have agreed that, of the 
directors, as joint agents of all parties, the stockholders shall appoint twenty, 
and the Goverament five. The interest of all parties is confided to this 
joint agency: and any distinctionin their powers, as arising from their differ- 
ent modes of appointment, is, in the judgment of the committee, not to be 
sustained. ‘They regard such distinction as entirely inconsistent with the na- 
ture of the agency created, and as deriving not the least countenance from 
any thing contained in the law. Pm 

The committee, nevertheless, to avoid misapprehension, wish to repeat, 
that it is undoubtedly the duty of the directors appointed by the President, 
and of all other directors, to give notice, both to Government and the stock- 
holders, of any violation of the charter committed or threatened. 

The Secretary of the Treasury has thought proper to observe that the 
measures of the committee of exchange are, as it appears, designedly, and 
_by system, so arranged as to conceal from the officers of the Government 
transactions in which the public are deeply involved. This, it must be ad- 
mitted,-is a very serious charge. It imputes a corrupt motive. The com- 
mittee have sought for the foundation, either in evidence or argument, on 
which this charge rests. They have found neither. They find only the 
charge, in the first place; and then they find the charge immediately stated 
as a fact, and relied on as the basis of other charges. 

The second reason specially reported by the Secretary as arising from 
the conduct of the bank, respects the bill of exchange drawn by the Secre- 
tary of the Treasury on the Government of France, and purchased by the 
bank. 

The general facts connected with this case, are these: 

By the late treaty of indemnity between the United States and France, 
it was stipulated that the French Government should pay to that of the 
United States twenty-five millions of francs, to be distributed among those 
American citizens who had claims against France for the unlawful seizure, 
capture, and condemnation of their vessels and property; the whole sum to 
be paid in annual instalments of four millions one hundred and sixty-six 
thousand six hundred and sixty-six francs each, into the hands of such per- 
sons as shall be authorized by the Government of the United States to re- 
ceive it—the first instalment to be paid at the expiration of one year next 
following the exchange of the ratification. r 

On the expiration of the year, the Secretary drew a bill of exchange, 
signed by himself as Secretary, on the French Government for the amount 
of this instalment, and sold it to the bank, like any other bill of exchange, 
and received the proceeds by credit of the amount to the account of the 
Tresurer in the bank. 

On presentment of this billatthe French Treasury payment was refused; 
the bill was accordingly duly protested, and it was taken up by a third 
person for account of the bank. The damages accruing on this bill, accord- 
ing to law and to constant usage in such cases, are one hundred and fifty- 
eight thousand dollars. 

If this bill had been transferred by the bank, as probably it was, the bank 
itself would have been answerable for damages even at a higher rate, if a 
third person had not taken up the bill for the honor of the bank. 


3 


[ 72 ] | 16 


On receiving information of the protest ot the bill, the officers of the 
bank, as was their duty, gave immediate notice to the Treasury Department, 
and accompanied that notice with the information, always given in such 
eases, that the drawers of the bili would beheld answerable for the da- 
mages. Such is the substance of the facts in this case. 

The bank, it would appear, was willing to collect the bill on account of 
Government, and to credit the Treasury with the proceeds when received; 
a course of proceeding which had this to recommend it, that the money to 
be received on the bill was to be received by the Government simply in 
trust for claimants under the French treaty, and was not ultimately destin- 
ed to the ordinary uses of the Treasury. On the contrary, indeed before 
the dishonor of the bill was known, it had been made, already, the legal 
duty of the Secretary to place the fund, so soon as received, at interest for the 
benefit of the claimants. ; 

But it was thought best to sell the bill, and to realize at once its amount 
into the Treasury; and the bill was sold to the bank in preference to others 
offering to purchase, for no reason, it is to be presumed, except that the 
terms of the bank were more satisfactory. The bill was thus purchased by 
the bank, and its proceeds credited tothe Treasury. This was a mere trans- 
action of the purchase and sale of a bill of exchange. There was uo trust 
confided to the bank, and no fiscal agency in the whole matter. Indeed the 
agency of the bank had been declined, the Secretary preferring to deal with 
it not as anagent, but asa purchaser, proposing to it not to collect the bill, 
but to buy it. On being remitted to Europe, and presented for payment, 
the bill was protested. By the universal commercial law, the Government, 
en the occurrence of this protest, became amenable to the bank for the 
amount of the bill, with damages. These damages may be ultimately claimed, 
with justice, from the French Government, if the bill was drawn upon suffi- 
cient grounds, and on proper authority; in other words, if the ebligation of 
the French Government was such that it was bound to accept and pay the 
bill; but unless there be something in the case to vary the general rule, which 
the committee do not perceive, these damages were part of the debt which 


had become due to the bank, as much as the principal sum of the bill. If | 


this be so, how could the directors relinquish this part of the debt aay more. 
than the other? They are agents for the corporation; they act as trustees, 
and have no authority, without consideration, to release, either to the Go- 
vernment or to individuals, debts due, or properly belonging to the corpo- 
ration. 

It has been suggested that the bank should have taken up this bill, when 
protested, on Government account. Two answers may be given to this sug- 
gestion: the first is, that the bill had been taken up by a correspondent abroad 
for account of the bank, before it was known in the United States that it had 
been protested. The second is, that it would have been unlawful for the 
bank to have advanced such amount to the Government, or on account of 
Government, for the purpose of taking up this bill, or for any other purpose, 
without an act of Congress. The express words of the charter forbid it. 

But, as a reason for removing the deposites, it appears to the committee 
quite immaterial whether the bank be right or wrong in claiming these dam- 
ages. If wrong, it will not recover them. Itis not judge of its own rights; 
and if the appropriate tribunals shall decide that the bank was acting on this 
occasion, or ought to have acted, as the agent of Government, or that it — 
was its duty to take up the bill on account of @ vernment, then the dam- 


iW E72] 
ages will Dot be aWuldert «7 ily Fa SEXO heey ha ee ee Re naasein gia Ponte ganas } 

ean its conduct, in this respect, be any possible reason to justify the removal 
of the deposites? What connexion has this occurrence with the safe keep. 
ing of the public treasures, or with the remitting them from place to Slide ; 
to meet the convenience of Government, according to the duty of the ad 

under the charter? The bank thinks itself entitled to damages on a protested 

bill purchased and held by itself, and drawn by Government. The Secre- 

tary of the 7 reasury thinks otherwise. If there be no reason to doubt the 

sincerity of the Secretary’s conviction, there is as little to doubt the sincérity 

of that entertained by the bank; and it is quite inconceivable to the commit. 

tee that the pendancy of such a difference of opinion, on such-a question, 
should furnish any reason whatever for withdrawing the deposites, unless it 
be at once admitted that the Secretary holds the power of removal as a per- 

fectiy arbitrary power, and may exercise it, by way of punishment, when- 

ever, in any particular, the conduct or the opinions of the bank do not con- 

form to his pleasure. 

‘The Secretary does not argue this matter. He offers no reason in oppo- 
sition to the legal right of the bank to the damages claimed. Indeed a 
hardly denies the right, He commences his observations on the subject by 
saying that the ruling principle of the bank is its own interest; and a] an, 
them with another declaration, that, as fiscal agent of the public, it availed 
itself of the disappointment of its principal for the purpose of enlarging its 
own prolits, 

Assertions like these, however else they may be disposed of, cannot be 
made subjects of argument. 

The last charge preferred against the bank, is, that it has used its means 
with a view to obtain political power, and thereby secure the renewal of its 
charter. 

The very statement of such a charge, as a reason for removing the depo- 
sites, is calculated to excite distrust in the wisdom and propriety of that 
measure; because the charge, too general to be proved, is too general, also, 
to be disproved; and since it must always rest mainly on mere opinion, it 
might be made at any time, by any Secretary, against any bank. [t would 
be, therefore, always a convenient cloak under which to disguise the true 
motives of official conduct. | 
» If proof be made out that the funds of the bank have been applied to 
illegal objects, the proper mode of redress and punishment should have been 
adopted; but what has this to do with the deposites? As in the case of the 
French bill, the Secretary. cannot justify the removal of the deposites on 
any such ground as this, unless it be conceded that he may use the power of 
removal as 4 punishment for any offence, of any kind, which the bank, in 
his opinion, may have committed. The committee have already expressed 
the opinion that no such latitude of power belongs to him; and the assertion 
of such a power, for such a cause as is now under consideration, shows that ! 
the power ought never to belong to any Secretary; because the olfence, on 
account of which itis here proposed to be exercised, is a_pelitical offence, 
incapable of definition, depending merely on the Secretary’s opinion, and 
vecessarily drawing into its consideration all the exciting controverted topics 
of the day. . The bank, it is said, ‘‘hassought to obtain political power.” 
What is the definition of snch an o ‘ence aS this? What acts constitute it? 
How is it to be tried?: Who is to be the judge? What punishment shall 
follow eonviction? All must see that charges of this nature are but loose 

3 ; -" 


{72 ] 18 


gid vogue wrvusutives, which may be made at any time, abd can never be 
either proved or disproved; and to admit them as sufficient grounds to justify 
the removal of the deposites, would be to concede to the Secretary the pos- 
session of a power purely arbitrary. 

The main fact relied on for this cause of removal shows how extremely 
unsafe all proceedings on any such reasons must be. That main fact is, that, 
between December, 1830, and December, 1831, the bank extended its loans 
twenty millions of dollars; and it is further alleged that, as if to leave no 
doubt of the motive of this extraordinary conduct, it continued to add rapid- 
ly to its loans, until in May, 1832, while its petition for renewal was pend- 
ing, those loans amounted to seventy millions. And the Secretary declares 
that this extraordinary increase of loans made in so short a space of time, 
and on the eve of a contested election in which the bank took an open and 
direct interest, demonstrates that it was using its money to obtain a hold 
upon the people of the country, to induce them, by the apprehension of 
ruin, to vote against the candidate whom it desired to defeat. This is strong 
assertion, but, so far as the committee perceive, it 18 assertion merely. Itis 

but the Secretary’s own inference from facts, from which very facts his 
“predecessors in office have drawn no such conclusions. 

Lhis great extension of the Joans, be it remembered, took place in 1831. 
Why was it not then complained ofi? How should it have escaped the 
vigilance of the Secretary of that day, at the time ittook place? And, if it 
did not not escape his vigilance, why did he not remove the deposites? So, 
also, as to the amount of loans in May, 1832. ‘That amount was perfectly 
well known at the time, and if it proved any offence, why was not the 
purishment inflicted then? How should all other Secretaries have slept 
over this great mischief? 

It might further be well asked, what evidence is there of the existence 
of any such motive asis imputed to the bank in this extension of its loans? 
There is no evidence, but the mere fact itself of the extension, and it cannot 
be denied that other and very different reasons for the extension may have 
existed; so that the charge is proved no otherwise than by inferring a bad 
motive, from an act lawful in itself, and for which good reasons may have 
existed? 

Nor is it either acknowledged, nor, so far as the committee know, 
proved that the bank took an open and direct interest, as a corporation, in 
the election referred to. The bank certainly was much interested in certain 
accusations which had been brought against it, and which became subjects 
of public discussion during the pendancy of that election. It had been 
charged with great misconduct and gross violation of its charter. These 
accusations must undoubtedly have called on the directors for answer. If 
made before Congress, they were to answer before Congress; if made judi- 
cially, they were to answer in the courts; if made in an official and formal 
manner, and in that manner submitted to the judgment of the country, the 
directors were bound to meet them before that country by every fair use of 
fact and argument, not only for the purpose of defending themselves as di- 
rectors, but for the higher purpose of maintaining the credit of the bank, 
and protecting the property entrusted to their care. If in thus defending 
the bank before the community, the directors carried their measures pesca 
this fair object of defence, or if they resorted to dishonorable or indecorous 
apiece i discussion; if they sought rather to inflame than to reason; if 

y submitted personal crimination for argument; if, even, they met in- 


19 Eid 


vective and violence with corresponding inveetive and violence; they fol- 
lowed bad examples, and are not to be justified. But on their right to de- 
fend themselves before the public against grave charges brought against 
them, and urged before the public, the committee entertain no doubt; and 
they are equally clear in opinion that the Secretary of the Treasury is not 
constituted the judge of the mode of exercising this right, and cannot justly 
remove the deposites merely because the conduct of the bank, in this parti- 
cular, has not happened to conform to his wishes. 

The committee, therefore, consider this last reason of the Secretary equally 
insufficient with the rest; and they regard it as the most objectionable of all 
in its principle, inasmuch as it proceeds on grounds which, if admitted, 
would Jeave a very high official duty to be exercised from considerations 
connected with the political feelings and party contests of every day, with 
ne guide but the individual opifiion of the officer who is to perform the act; 
an opinion which, it is possible, may itself be no less tinctured with politi- 
cal motive and feeling than the ggpduct which it. would reprehend. 

If an unlimited power be conteded to the Secretary to inflict penalties on 
the bank for supposed political motives, in acts legal in themselves, where 
is the security that the judge may not be found acting under the same im- 


pulses which he imputes to the party accused? 

The committee entertai doubt that the immediate cause of the exist- 
ing public distress is und in the removal of the public deposites, and 
in the manner in which#that removal has been, made. No other adequate 


eause has been suggested; and those who justify the removal do not so much 
deny this to have been the cause, as insist that it was not necessary that any 
such effect should have followed from it. In other words, they argue that, 
notwithstanding the removal, the bank still possessed the power, if it had 
chosen to exercise it, of warding off the blow which has fallen on the coun- 
try, or at least of mitigating its severity. 

Nothing could have been rationally expected but that the bank, deprived 
of the deposites, and denounced by the Executive Government, would feel 
itself called on to take just care of its own interest and its own credit. Of 
the means necessary to the attainment of these ends, the directors alone were 
judges, and the committee have no evidence before them to show that they 
have not exercised their judgment fairly, and with a real solicitude to accom- 
modate the commercial community, in the altered state of things, as far as 
has been practicable consistently with the security of the institution which 
it is equally their duty to the public and the stockholders to maintain. They 
are certainly under every obligation of duty, in the present distressed state 
of the country, to do every thing for the public relief which is consistent with 
the safety of the bank, and with those considerations which the approaching 
expiration of its charter makes it important for the directors to regard. — 

The removal itself, and the manner of effecting it, are causes entirely 
sufficient, in the judgment of the commiitee, to produce all the conse- 
quences which the country has experienced, and is experiencing; and these 
eonsequences, they think, are to be referred to those causes as their just 
origin. How could any other result have been expected? ‘The amount of 
the deposites was nine millions of dollars. On this amount in deposite there 
was sustained, no doubt, a discount of far greater magnitude. ‘The with- 
drawal of this sum of nine millions frora the bank necessarily compelled it 
to diminish its discounts to the full extent of all that part which may be 


, 
ov 
7 


{72 ] 20 

supposed to have been sustained by it. It is to be remembered, too, that 
this was done at a moment when business of every kind was pressed with 
ereat activity, and all the means of the country fully employed. 


~ The withcrawing of so large an amount at such a time, from hands actu- - 


ally holding and using it, could not but produce derangement and pressure, 
even if it had been immediately placed in other banks, and if no unfriendly 
feeling, and no Want of confidence, had ettenced the transaction. But 
it is quite obvious that the operation to which the Secretary has resorted has 
been attended witn both these additional and powerful causes of derange- 
nent. It has created unfriendly feelings, and it has diminishéd confidence. 
This change of the deposites is made on the strength of charges agarnst the 


bank of a very gravé and aggravated nature; such as, if true, would most se-- 


riously affect its credit for solvency end stability. It is proclaimed to the 
whole world as having converted itself into a political partisan, misapplied 
its funds, neglected its highest duties, and entered on a career of electioneer- 
ing against the Government of the country. 

‘These serious charges necessarily put the bank on its defence, and the ex- 
traordinary spectacle is exhibited of a warfare by the National Government 
on the National Bank, notwithstanding that the Government is itself a great 
proprietor in-the bank, and notwithstanding that the motes of the hank are 
the currency in which the revenues of country aredy las receivable. | 

The true and natural relation between the Goverament and the bank is al- 
together reversed. Insteail of enjoying, the confidence of the Government, 
it is obliged to sustain its most serious official asssults, and to maintain itself 

against its denunciations. The banks selected by Government as its agents 

are themselves thrown, perhaps unwillingly, into an attitude of jealousy and 
auspicion with the Bank of the United States. They become cautious and 
fearful, therefore, in all their proceedings; and thus those who should co-op- 
erate to relieve the public pressure, are considering mainly their own safety. 
Fearful of each other, and fearful of the Government, they see the distress 
eontinue, with no power of beneficial interposition. 9 

It may be asked, why are not. these deposite banks able to maintain as 
large a circulation on the nine millions of deposites as the Bank of the 


United States? And will they not be thus able when the present panic shall - 


have subsided? The commiltee think both these questions easily answered. 

The Bank of the United States has a credit more general, it may be said, 
more universal, than any State bank does possess. The credit of the Bank 
of the United States is equally solid, iis bills and notes received with equal 
confidence, for the purpose of circulation and remittance, in every quarter 
af the country. No paper circulation, so far as the commiltee know, which 
ever appeared in the world, has approached nearer to the value and unifor- 
mity of a. specie currency than the notes and bills of the Bank of the United 
Staies. To the State banks these notes and bills have performed the office 
of specie. All the State banks have discounted, upon the possession of 
them, with the same freedom and bolcness as they would have done on an 
equal amount of the precious metals. . 
therefore, is not merely a withdrawing of the amount curtailed from the 
general mass of circulation —it is removing, rather, to the amount curtailed, 
the basis of the general circulation; and although the actual amount of notes 


pil Pe has not been recently greatly diminished, there is reason 10 suppose 
a € amount held by ‘Slate banks has been greatly diminished, 
ie ¢ remeval af the denagitde hag Speduted directly on the amount ef the 


The curtailment of their circulation, — 


. [74] 
Circulating Body 


at a moment when that amount could not bear any con- 

‘siderat YY A : Heel ; 

siderable reduction, suddenly made, without producing sensible effect.. It 

has diminished prices, and, in some instances, it has had this effect to a very 

material’degree. It has operated on the internal exchange, and has, most 
‘with very serious and heavy inconveniencies in 


manifestly, been attefid 
thatimportant bratich of the national interest. More than all, it has acted 
On opioion; it has disturbed the general confidence; it has weakened the 
public faith in the soundness of the currency, and it has alarmed men for the 
security of property. As yet, we hardly know it effects on the credit of 
the country ii, di Perhaps it is not easy to anticipate those effects; 
but if causes which operate here, should be found to have been efficient there 


also, a still’greater degree of pressure and distress than has yet been felt 
may be expected, ~ 


The committee, therefore, 
on the whole, as a measure high! ihebanks and altogether unjustifiable. 


Nnot but regard the removal of the deposites, 


The public moneys were safe i re bank. This is admitted. All the du- 
ties of the bank connectéd»with these public moneys were faithfully dis- 
charged. This, tob, is admitted. The subject had been recently before 
the House of Represe (id that House had made its opinion against 
' the removal known byja PUnequivocal vote. Another session of Con- 
gress was closeat |} n ‘when the whole matter would again come before it. 
Under these circumstances, to make the removal, with the certainty of cre- 
ating so much alarm, atid of producing so much positive evil and suffering, 
such derangement of the currency, such pressure and distress in all the 
branches ef the business of private life, is an act which the committee think 

the Senate is called on to disspprove. 
' The reasons which have thus been stated, apply to the whole proceed- 
angs of the Secretary relatirg to the public deposites, and make it un- 
necessary to consider’ whether there be any difference hetween his power 
over moneys already in the hank, and his power to suspend future deposites. 
The committee forbear, also, to consider the propriety of the measures adopt-~ 
ed by the Secretary for the safe-keeping of the public money since their 
withdrawal from the bank. ‘ They forbear, too, from entering into any dis- 
cussion, at present, of the course of legislation proper to be adopted by Con- 
gress under the existing state of things. In this report, they have confined 
their consideration to the removal of the deposites, the reasons assigned for 
it, and its immediate consequences; and on these points they have formed 
the opinions which have now been expressed. : ; 

They recommend tothe Senate the adoption of the resolution which has 
been referred to them. 


7 

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